Gold prices headed for a second consecutive weekly gain on Friday as demand strengthened following the US Federal Reserve’s interest rate expectations, while auto catalyst metal palladium jumped more than ‘8%.
Spot gold was down 0.2% at $2,354.86 per ounce at 09:31 am ET (1331 GMT). However, the metal gained 0.9% this week, adding to last week’s 1.7% rise.
U.S. gold futures remained firm at $2,368.70.
“Gold has benefited from a batch of weak economic data this week and traders continue to treat bad news as ‘good news’ that will lead to faster and more rate cuts,” said Tai Wong, independent metals trader based in New York.
Data on Thursday showed that initial U.S. jobless claims fell moderately last week, while new housing construction fell. This, coupled with last month’s tepid retail sales, maintains the possibility of a rate cut in September.
The market is currently pricing in one or two rate cuts of 25 basis points each by the Fed this year. Lower interest rates reduce the opportunity cost of holding unprofitable bullion.
Meanwhile, spot palladium rose 5.5% to $974.25 an ounce, after hitting a one-month high earlier in the session. However, spot prices are still down 11% this year, following a 39% slump in 2023.
“The (palladium) market is tight this morning and has been relatively tight all week. Note the excessive amount of outright short positions on the NYMEX; as we approach the end of the quarter (and in some cases the year fiscal) next week, there could be some book-squaring hedging,” said Rhona O’Connell, an analyst at StoneX.
Palladium prices are trading above their 21-50 and 100-day moving averages, considered a bullish signal for investors following technical signals.
Elsewhere, platinum rose 1.5% to $992.72 an ounce, while silver fell 1.9% to $30.13, but both metals were headed for weekly gains.
